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Monday April 15th, 2024

Sri Lanka’s SEC approves new listing board and rules for SOEs

ECONOMYNEXT – Sri Lanka’s capital market regulator has approved the creation of a separate listing board and listing rules at the Colombo Stock Exchange (CSE) for state-owned enterprises’ (SOEs) expected entry into the bourse.

The salient features of the rules applicable to the new Board include a stated capital of not less that 250 million rupees revenue, net asset and market capitalization tests, minimum 3 years operating history, time–bound requirements for financial reporting, and a minimum 10 percent public float with 300 public shareholder requirement.

“These rules were developed under the guidance and direction provided by the SEC to the CSE, and include consultations with, and inputs by, the SOE Restructuring Unit of the Government and the Auditor General,” the Securities and Exchange Commission of Sri Lanka (SEC) said in a statement.

The SEC said this was in response to a government policy to expedite reforms in SOEs.

The government, in a drive to raise revenue and reduce expenditure, is seeking to improve SOEs’ governance, efficiency, productivity and profitability.

“The aim of the policy is to make them market-oriented,” Minister Bandula Gunawardana told reporters previously.

Generally, companies listed on the stock exchange have better financial accountability as they are answerable to investors. Listing also ensures effective monitoring of compliance of the issuer.

“If you take a listed company with 1,000 shareholders, these entities are compelled to publish quarterly and annual accounts,” Sri Lanka State Enterprise Restructuring Unit, Director General Suresh Shah told a forum organized by the Asian Development Bank, earlier this month.

“SOEs have 22 million shareholders but do not have to give quarterly as well as annual accounts,” Shah pointed out.

Most Sri Lankan SOEs, which are reporting losses, have traditionally relied on government funding and borrowings to function.

The corporate governance requirements under the new SEC rules will be the same as those applicable to the Main Board and Diri Savi Board with a view to aligning the internal governance structures and processes of listed SOEs with the standards set in the market.

“The dismal performance of many SOEs in Sri Lanka have become a heavy fiscal burden upon the country with significant macroeconomic implications,” the SEC said.

“The SEC and the CSE have given due consideration to the current levels of governance, organization structure and operational challenges prevailing in the SOE sector and have therefore created a separate Listing Board and Listing rules with a view to enabling SOEs to progressively transition from what they are now to what they should be,” the SEC said.

“Any SOE that meets the Listing criteria of the Main Board or the Diri Savi Board can straightaway list on those Boards,” Tushara Jayaratne, Deputy Director General, SEC said. (Colombo/Sep13/2023)

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Sri Lanka to discuss two contentious points with bondholders: report

ECONOMYNEXT – Sri Lanka and sovereign bondholders are to discuss two matters in the near future which the two sides failed to reach agreement at March talks in London, a media report quoting a top aide to President Wickremesinghe as saying.

Sri Lanka and bondholders had discussed four matters on restructuring international sovereign bonds in late March and agreement had been reached on two, President’s Chief of Staff Sagala Ratnayake was quoted as saying on state-run ITN television.

A restructuring proposal by bondholders was not in line with IMF requirements, and Sri Lanka had sent a counter proposal, he said.

The matters will be discussed at round of talks in the near future.

Sri Lanka was optimistic of reaching an agreement with the bondholders before June, officials have said.

According to matters already in the public domain, sovereign bond holders are keen to get a bond tied to dollar gross domestic product, as they feel IMF growth projections are too low.

In past re-structuring so-called value recovery instruments, a type of warrant, gave their owners extra payments if a country did better than expected and were tied to items like oil prices.

Bondholders had initially proposed bond which would have a lower hair cut initially, and it will have additional hair cuts if growth is low (about 3.1 percent) as projected in an IMF debt sustainability analysis. (Colombo/Apr15/2024)

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BIMSTEC Secretary General visits Sri Lanka, discusses regional cooperation

ECONOMYNEXT – The Secretary General of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), discussed measures to enhance regional cooperation, during his visit to the island last week.

Ambassador Indra Mani Pandey, Secretary General of BIMSTEC visited Sri Lanka from 07 – 12 April 2024, following his assumption of office as Secretary General of BIMSTEC in January this year.

The Secretary General “met with senior officials of relevant Ministries/Agencies to discuss measures to enhance regional cooperation under various BIMSTEC initiatives,” the Foreign Ministry said in a statement.

Several BIMSTEC countries have bilateral trade agreements, such as Sri Lanka and India, Thailand and Myanmar, Sri Lanka and Thailand, but no collective regional agreement to enable intra-regional leverage.

During the visit, Secretary General Pandey held discussions with Ministry of Foreign Affairs officials and paid courtesy calls on the President and the Minister of Foreign Affairs.

Secretary General Pandey participated at an event on “Regional Cooperation through BIMSTEC” organized by the Lakshman Kadirgamar Institute (LKI) on 9 April. (Colombo/April15/2024)

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Sri Lanka rupee closes weaker at 299.00/10 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 299.00/10 to the US dollar in the spot forex market on Monday, from 298.50/55 on Wednesday, dealers said, while bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed stable at 11.90/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent up from 12.10/15 percent.

A bond maturing on 15.09.2029 closed stable at 12.20/40 percent. (Colombo/Apr15/2024)

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